Most employers will have to show a revenue fall of at least 30 per cent (50 per cent for very large companies) in both the combined three months to June 30 and the combined three months to September 30, compared with the same quarters last year, Treasury said.
That is a much tougher requirement than under the original $70 billion JobKeeper program that now covers 960,000 employers, who were required to record or forecast a 30 per cent turnover decline for a single month to qualify for up to six months of wage subsidies.
The new three-month program from September 28 onwards will also abandon allowing businesses to use forecast revenue falls to qualify and will be based on actual revenue for the two previous quarters.
Tony Watson, tax partner at accounting firm Nexia, said the new system was intended to “remove the chains” to encourage people to shift jobs.
“JobKeeper 1.0 had just the one low gate to qualify,” he said. “JobKeeper 2.0, the gates to get through are very much tougher.
“It is taking away the ability to project revenue and window dress revenue for a month.”
The additional six-month program is forecast to cost $16.6 billion, much less than the estimated $70 billion for the original system paying a flat $1500 fortnightly subsidy to 3.5 million workers.
The government has not publicly released a forecast of the number of employers expected to requalify.
Sole traders, who make up 40 per cent of organisations receiving JobKeeper and 12 per cent of individual recipients, will be eligible if they are not a permanent employee of another company.
Workers weaned off
Treasury forecasts show about 2.5 million of the 3.5 million workers on the program will be weaned off the wage subsidy by early next year, based on many businesses recovering and others going bankrupt.
The present flat $1500 fortnightly wage subsidy will be trimmed to $1200 from September 28 and to $1000 from January 4 to March 28.
Employees working fewer than 20 hours a week will receive $750 and then $650 over the same periods.
Businesses that qualify for the final quarter of 2020 will need to show a sustained revenue decline in the three months to December 31 to remain on the program in the March quarter.
The revenue threshold declines are 30 per cent for businesses with annual turnover below $1 billion, 50 per cent for larger employers and 15 per cent for non-profit organisations.
KPMG lead tax partner Grant Wardell-Johnson said a challenge for businesses trying to plan if staff would remain eligible for JobKeeper from September 28 onwards would be waiting until the end of September to calculate their quarterly revenue.
“The declines across two quarters rather than just one month is also a loss of optionality and there is less room for fortuitous circumstances which I think many were beneficiaries of.”
Treasury said the Commissioner of Taxation would have discretion to extend the time an entity has to pay employees in advance of receiving the wage subsidy, so they have time to confirm eligibility.
Melbourne-based BDO’s partner-in-charge of the business services, Mark Pizzacalla, said, “if it wasn’t for JobKeeper there would be many more businesses out of business”.
“Businesses in Melbourne were recovering reasonably well until the second lockdown.
“They have to use this period to restructure their businesses and preserve their cash flow to have a balance to kick-start post-lockdown.”
Industries with the largest number of recipients by organisation were construction, professional, scientific and technical services, and healthcare and social assistance.
Sectors with the greatest share of individual recipients were arts and recreation services, and rental, hiring and real estate services.
There are 3.5 million workers on JobKeeper.
Treasury forecasts that will drop in the December quarter to 1.4 million, of whom 175,000 will be on the lower $750 tier.
The number will drop to 1 million in the March quarter, of whom 125,000 will be on the lower $650 tier. This is based on businesses no longer needing the assistance and others scaling back or going under.